Distribution channels

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The meaning of Distribution Channels

Distribution channel is a channel marketing intermediaries both transportation and storage of the goods and services from producer to consumer hands. Influenced food distribution channels between the producer and the consumer are the wholesaler's marketing intermediaries (distributors / agents) who served buyers retailers (retailers) and retailers (retailers) that retail product to the end consumer.

Function of Distribution Channels

The main function of the distribution channel is delivering goods from producers to consumers, the company's conduct and determine the distribution channel should do a good consideration.

The distribution channel functions according to Kotler (1997: 531-532) are:

ü  Information, which collects vital information about customers and competitors to help plan and exchanges.

ü  Promotion, the development and deployment of persuasive communication about the products offered.

ü  Negotiation, which is trying to agree on a price and other terms, allowing transfer of ownership rights.

ü  Ordering, which is the distributor ordered goods to the company.

ü  Payment, the buyer pays the seller bills through banks or other financial institutions.

ü  Title, the transfer of ownership of goods from one organization or person to the organization / others.

ü  Physical possession, namely transport and store goods from raw materials to finished goods, and finally got to the end consumer.

ü  Financing, the request and use the funds for the costs of the work of distribution channels.

ü  Risk Taking, which bear the risks associated with the implementation of the work distribution channels.

Various kinds of distribution channels:

·         producer – Consumer

·         producer - Retailer – Consumer

·         Producers - Wholesalers - Retailer – Consumer

·         Producers - Agent - Retailer – Consumer

·         Producers - Agent - Wholesaler - Retailer – Consumer

Generic Channels Of Distribution

Additional Channels For Industrial Products

ž  Mail order.

                Goods are ordered by catalogue, and delivered to the home by post or parcels carrier. The physical distribution channel is thus from manufacturer to mail order house as a conventional trunking (line-haul) operation, and then to the consumer's home by post or parcels carrier, bypassing the retail store.

ž  Factory direct to home.

                It can occur by direct selling methods, often as a result of newspaper advertising. It is also commonly used for one-off products that are specially made and do not need to be stocked in a warehouse to provide a particular level of service to the customer.

ž  Internet and shopping from home.

                Initial physical distribution channels were similar to those used by mail order operations - by post and parcels carrier. The move to internet shopping for grocery products has led to the introduction of specialist home delivery distribution operations. These are almost all run by third-party companies. In addition, it is now possible to distribute some products, such as music, software and films, directly, computer to computer.

ž  Factory to factory/business to business.

                The factory-to-factory or business-to-business channel is an extremely important one, as it includes all of the movement of industrial products, of which there are very many. This may cover raw materials, components, part-assembled products, etc. Options vary according to the type and size of product and order, may range from full loads to small parcels, and may be undertaken by the manufacturers themselves or by a third party.